Rc/65/1996 Of The Comm.of Income Tax.hyd v. M/S Babu Khan Builders Hyd

AND THE HON’BLE SRI JUSTICE R KANTHA RAO R.C. No. 65 of 1996 JUDGMENT: (Per Sri Justice B Prakash Rao) This reference arising under section 256 (1) and (2) of the Income TaxAct, 1961 raises the question as to “whether on the facts and circumstancesof the case, the Income Tax Appellate Tribunal is correct in holding that theannual value of the property, of which the assessee was the legal owner,cannot be assessed in the hands of the assessee under section 22 of theIncome Tax Act?” Heard both sides. Before the issue is taken up for consideration, it necessitates to re-extract the facts which gave raise to the present disputed question, assuccinctly narrated from the emanating orders. The assessee firm has filed its return of income on 28.9.1988,declaring a loss of Rs.1,272/-. The firm was engaged in real estate businessand during the period from 1979 to 1984 it has constructed a commercialcomplex known as ‘AL KARIM TRADE CENTRE’ at M.G.Road, Ranigunj,Secunderabad and has sold the flats/shops/floor spaces etc. In response tothe notices of hearing issued under section 143 (2) and 142 (1) of the Income Tax Act, the counsel appeared and filed details called for from time to time. Mr Syed Ghousuddin, who is supposed to be assisting the assessee firm,and its auditor in their accounts, was present during the course of hearings. The managing partner of the firm, Sri Ghiasuddin Babukhan on oath statedthat Mr Syed Ghousuddin has prepared the profit and loss account andbalance sheet of the relevant previous year, Mr Ghousuddin also gavestatement on oath. Copies of these statements were made available to theassessee firm. There was a search and seizure operations under sections132 of the Income Tax Act (for short the Act), in the case of the assessee firm,and its partners. The seized books of accounts were examined and theassessee was allowed to take extracts of the seized papers, which would findmention later in this order. After examining the evidence and detailsfurnished and evidence produced, and after giving due opportunity to theassessee firm of being heard, the assessment was completed. The previous year of the assessee firm is the calendar year (the yearended 31.12.1986). The multistoried complex ‘Al Karim Trade Centre’contains approximately 190 flats/shops/floor places. The construction wascompleted before the end of the calendar year 1984 and no building activitytook place subsequently. Admittedly, no construction account wasmaintained as seen from the ledgers for the previous years ended on31.12.1985, 31.12.1986 and even on 31.12.1987. The assessee firm is following the method of accounting whereby the The previous year of the assessee firm is the calendar year (the yearended 31.12.1986). The multistoried complex ‘Al Karim Trade Centre’contains approximately 190 flats/shops/floor places. The construction wascompleted before the end of the calendar year 1984 and no building activitytook place subsequently. Admittedly, no construction account wasmaintained as seen from the ledgers for the previous years ended on31.12.1985, 31.12.1986 and even on 31.12.1987. The assessee firm is following the method of accounting whereby the anticipated profit at 20% of the cost of construction incurred during eachprevious year (from the commencement of the project is computed and addedthe cost of construction.) From that total, after deducting the cost ofconstruction and other expenses, the gross profit is arrived at. From the grossprofit certain expenses are deducted and the net profit is arrived at and thesame is offered as income in the returns filed. The cost of constructiontogether with anticipated profit forms the work-in-progress. The work-in-progress each year is added to the opening work-in-progress and the total iscarried to the balance sheet at the end of each previous year. This pattern iscontinued each year, till the venture is completed. This, in effect, means theincome offered, which the project is taking shape, is only on an estimatebasis, and the real income from the profit will be assessed only in the year ofcompletion of project. As profit assessed on the estimate basis forms part ofthe work-in-progress, the difference between the total sale consideration andthe work-in-progress (cost of construction plus profit assessed in the earlieryears) reflects the total income for the venture, which is to be assessed in theyear of completion of the project/venture. The same method of accounting isfollowed by the other firms of the group viz., M/s. Shahzahan Builders, M/s.Hyderabad Builders and M/s. Babukhan constructions, which were managedby the same persons and assisted and advised by the same accountant forfiling the income tax returns and representations. The assessee firm vide its letter dated 26.12.1985 has stated that ‘thebusiness activity i.e., the building complex known as ‘Al Karim Trade Centre’is completed and a few portions are remaining to be registered in the name ofthe purchasers, which are likely to be over by 31.3.1986 and the balancingprofit or loss, if any, is worked out in the Assessment year 1986-87. If not,they have to wait till 30.6.1987 to file return for declaring profit and loss of thefirm for the period ending 31.12.1986, if not changed. Accordingly, theassessee firm has requested for change of previous year from 31.12.1985 to31.3.1986. However, the request for change of the accounting year has notbeen acceded to by the department. By another letter dated 4.1.1986, theassessee firm has stated that they can register some of the unsold portionbefore March, 1986 and complete account can be drawn up for theAssessment year 1986-87 and the venture can be closed if the change of theprevious year from 31[st] December to 31[st] March is allowed as requested bythem. These two letters show that the venture was completed by 31.3.1986itself and only a few portions remained to be sold as on that date. As on31.12.1986 i.e., at the end of the accounting year, relevant for theAssessment year 1987-88, all but two portions viz., 23-A and 703 were soldand registered. The plan for the building ‘Al Karim Trade Centre’ seizedduring the course of the search does not show portion 23-A indicating that itis a subsequent addition. Physical verification has shown that it is in fact a space below the stair case converted into small portion. space below the stair case converted into small portion. From the balance sheet filed along with the return of income filed forthe Assessment year 1987-88, it is seen that the work in progress was shownat Rs, 1,09,22,118/- and the advance for sale of flats was shown atRs.1,21,37,700/-. The work in progress was shown at the same figure evenin the balance sheet No.B-304/87-88 dated 26.2.1990. As on 31.12.1987 asper the balance sheet filed along with the return of income for the assessmentyear 1988-89. In fact, the same position is continued even for theAssessment year 1989-90. In the books of accounts for the years ended31.12.1985 and 31.12.1986 (including the seized books), the amountsreceived towards sale of flats and shown as ‘Advance for sale of flats’ in thebalance sheet are not adjusted towards the sale consideration even inrespect of the flats registered, and no entries were passed in the ledgeraccounts, which show that the books of account of the assessee are incorrectand incomplete. Hence, rejected under section 145 (2) of the Act. It wasstated that even assuming for a moment, the income assessable under theAct cannot be properly deduced from the books of accounts of the firm or fromthe method employed by the assessee. In fact, neither the Managing Partner,Sri Ghiasuddin Babukhan, nor Mr.Ghousuddin , the Accountant, whoprepared the profit and loss account and the balance sheet for theAssessment year 1986-87 onwards could say as to when the firm would treatthe sale consideration as income and offer the same to tax. It was stated by them that they are filing returns and preparing the statements, i.e., profit andloss account and balance sheet as per the advice given. Thus, though theproject was completed and the income has accrued and was realized by thefirm, no income was offered for taxation. Hence, the method of accountingfollowed by the firm, which is not fully explained by them, cannot beaccepted, even if it is consistent. As the correct income assessable under theact cannot be deduced therefrom. Hence, the provisions of section 145 (1) applied basing on the books of accounts and the evidence available forcomputation. The assessee firm is engaged in the construction and sale of flats andit is seen that all the shops/flats/floor spaces are generally sold only forcommercial purposes. As the assessee firm does not maintain records toshow the stage or the extent to which the construction work is completed, theconstruction account and the anticipated profit shown by the assessee firmhave been accepted upto Assessment year 1985-86. But the position isdifferent for the Assessment years 1986-87 and 1987-88. In this connection,it would be appropriate to refer to the Accounting Standard AS-7 published bythe Institute of Chartered Accountants of India in 1985 describing theaccounting for construction contracts. This accounting standard applies forconstruction contracts undertaken by the contractors. There, the contractorundertakes to do a specific construction work for others on specified terms and conditions. In the case of the assessee firm, the assessee firm does aconstruction work for itself. The only difference is in the case of theconstruction contracts, there is no sale whereas in the assessee’s case thereis a sale of the construction portions, i.e., flats , portions etc. As per theAccounting Standard AS -7, basis for recognizing the revenue onconstruction contracts can be done in either of the two methods (a)percentage of completion method and (2) completed contract method. and conditions. In the case of the assessee firm, the assessee firm does aconstruction work for itself. The only difference is in the case of theconstruction contracts, there is no sale whereas in the assessee’s case thereis a sale of the construction portions, i.e., flats , portions etc. As per theAccounting Standard AS -7, basis for recognizing the revenue onconstruction contracts can be done in either of the two methods (a)percentage of completion method and (2) completed contract method. PERCENTAGE COMPLETION METHOD: Under the percentage ofcompletion method, the amount of revenue recognized is determined byreference to the stage of completion of the contract activity at the end of eachaccounting period. The complete details of the method are given in theextracted portion from the accounting standard AS-7 as per annexure. Suffice it to state that all the relevant factors have to be taken into consideration to determine the stage of the completion of contract at the endof the accounting period. COMPLETED CONTRACT METHOD: Under this method, revenue isrecognized when the contract is completed or substantially completed. Herealso, all the relevant factors are taken into consideration for computing therevenue. The relevant portion is again extract, and given in the annexure. The assessee firm has constructed a multi storied building known as‘Al Karim Trade Centre’ at M G Road, Secunderabad during the period 1980to 1984 and the building consists of about 190 flats/portion/floor spaces and at the end of the accounting year ended 31.12.1986 all such portions excepttwo have been sold, and registered and consideration was received beforethe registration as per the agreements entered into with various purchasers ofsuch portions. Thus, it is clear that 99.5 % of business activity is completed, and theagreements entered into with the flat buyers have been fulfilled andexecuted. As the assessee firm has entered into contractural agreement withthe flat buyers for the construction, and sale and handing over possession,and as mentioned above such handing over and sale was completed in allbut two cases. It can be concluded that 99.5 % of the contractual agreementsare completed. Even in respect of the unregistered portions, it is clear fromthe details furnished by the assessee that advances have been received. The amounts were received in full for portion 703 and for portion 23-A out ofthe total consideration of Rs.45,700/- receivable (for 235.6 sq ft) , Rs.47,000/-was received before 31.12.1986. Therefore, the business activity, i.e., theconstruction and sale of flats of the assessee firm is completed by 31.12.1986or it can be definitely said that the contract is substantially completed and therevenue from the business activity should be recognized in the accountingyear ended on 31.12.1986 by applying either of the methods, i.e, percentagecompletion method or completed contract method, as the assessee hascompleted 99.5 % approximately of its business activity as discussed. The assessee has, thus not only received the income but the income also accrued to the assessee firm in respect of all the flats sold by 31.12.1986. In the assessee’s case, application of either of the above methods of recognizing the revenue will give the same result because 99.5 % completion can also be considered as substantial completion. Hence, the income from the sale of flats upto the end of the accounting year 31[st] December, 1986 can be computed as below; The assessee has, thus not only received the income but the income also accrued to the assessee firm in respect of all the flats sold by 31.12.1986. In the assessee’s case, application of either of the above methods of recognizing the revenue will give the same result because 99.5 % completion can also be considered as substantial completion. Hence, the income from the sale of flats upto the end of the accounting year 31[st] December, 1986 can be computed as below; Total sale consideration received for the portions sold and1,19,57,750registered upto the end of the accounting year 31.12.1986( i.e., 99.5 % of the total)(This is arrived at by deducting the advance received forthe unsold portion from the total advances, which are notadjusted in the books of accounts)LESS: The work in progress (including the cost ofconstruction and the anticipated profit brought to tax uptothe end of the accounting year 31.12.1985 ) afterdeducting the proportionate cost of construction for theunsold flats based on the plainth area for two portions1,07,74,861mentioned above 11,82,889 The difference between the two amounts shown above is to be treated as the income of the assessee firm for the accounting year ended 31.12.1986 (Assessment year 1987-88) i.e., the year of completion of the constructionand 99.5 % of the sale. As the sale consideration for the remaining two flats i.e., 703 and 23-Awas also received (as seen above) before 31.12.1986 and the entireconstruction activity was completed long back the income from the sale of these two flats would also become liable for tax in the assessment for the Assessment year 1987-88 itself and income can be computed from the sale of these two flats, as below; During the search in the assessee’s business premises, these arefound in file NO. MBP-(B)-(2) (M/s. Moghul Builders and Planners are theselling agents for the flats fo the assessee firm). These statements were putto Sri S Ghousuddin, who was examined on oath on 5.10.1988. He hasidentified the seized documents as having prepared by him on the advice ofMr Abdul Razack, Tax Consultant of the Assessee firm. At page 7 of thesepapers, the profit of the firm for the period 1.1.1985 to 30.11.1985 wascomputed at Rs.11,78,283/-. At page 9, the income for the purpose ofadvance tax estimate for the accounting year 1985-86 was shown at Rs.7lakhs and in fact, an advance tax estimate was filed for the Assessment year1987-88 on 15[th] September, 1986 showing income at Rs.7 lakhs. This alsoconforms to the earlier two letters of the assessee dated 26.12.1985 and 4.1.1986 wherein it was mentioned that the project would be completed by31.3.1986 and the accounts would be drawn up. The above method of computation and the reasons discussed for thesame were communicated to the assessee by this office letter dated7.11.1988 and the assessee was asked to furnish objections for the same. The assessee has furnished its objections by its letter dated 5.12.1988. 4.1.1986 wherein it was mentioned that the project would be completed by31.3.1986 and the accounts would be drawn up. The above method of computation and the reasons discussed for thesame were communicated to the assessee by this office letter dated7.11.1988 and the assessee was asked to furnish objections for the same. The assessee has furnished its objections by its letter dated 5.12.1988. It was claimed that the method of accounting is regularly employed bythe assessee firm. There is no change and true profits have been and can bededuced therefrom. But the firm wanted to know whether the provisions ofSection 145 (1) or section 145 (2) are being invoked. But in reply is silent onhow and when the true profits have been deduced. The firm claims that theAccounting Standard AS-7 is not applicable to its case. The firm relied uponthe decision of the Gujarat High Court reported in 133 ITR 55 cited at page 8of this order to claim that every receipt is not income. The firm has stated asto how can sale consideration less work in progress can be taken as theirincome chargeable to tax. For the same reasons, it has also objected to treatthe advances received for the sale of flats 703 and 23-A as income of theprevious year (Rs.68,403/-). It was claimed that flat no. 703 was notregistered upto 31.12.1986 as the purchaser was awaiting for an auspiciousday for registration and the flat no. 23-A was not sold. The firm anticipatedthat all the portions of the building would be completed and sold before 31.12.1986, and had also prepared an estimate accepting the profit and paidfirst instalment of advance tax in time. Immediately thereafter there was asearch at their premises on 26.9.1986 which had created a fear and scare inthe market and also the purchasers. One of the purchasers had cancelled theportion, he has purchased and which was still remained unsold till 5.12.1988.After filing the estimate of advance tax the municipal corporation ofHyderabad also issued a notice memo No. 3539/M1/83 dated 20.9.1986followed by another demolition notice NO. 348/TP/Sd/AS/77 dated17.10.1986 which had created a lot of confusion and panic among thepartners and also with the purchasers as the demolition notice issued byMCH included some of the portions which were sold and registered. Afterreceipt of notice from the municipal corporation of Hyderabad, some of thepurchasers started pressurizing for refund of the amounts paid towards thepurchase consideration and demanded payment of damages for the same.They have filed a civil suit and also obtained a stay from the High Courtagainst the demolition till the disposal of the civil suit. Under thecircumstances, it was impossible for the firm to judge the final profit as theywould not have got any profit at all if the part of the building is demolished. The firm claimed that perhaps they might end in a loss, if they are made topay huge damages to their purchasers, and the situation is the same as onthe date of letter also i.e., 5.12.1988. The assessee firm was asked to furnish evidence in support of the claim for the deviations made and the allegeddemand for refund of amounts from the purchasers etc and the assessee firm has furnished a reply dt 6.1.1989. However, rejecting these objections, it was treated that the assessee’scontention that the true profits can be deduced from the method ofaccounting has no relevance because every year the income is shown byestimating the anticipated profit. However, in the year of completion of theventure the method should be different i.e., the total income from the ventureshould be computed by taking the total sale consideration received anddeducing therefrom the total cost of the construction plus anticipated profitshown as work in progress in the accounts. Hence, section 145 (1) isapplicable and the income can be determined in a rational manner. has furnished a reply dt 6.1.1989. However, rejecting these objections, it was treated that the assessee’scontention that the true profits can be deduced from the method ofaccounting has no relevance because every year the income is shown byestimating the anticipated profit. However, in the year of completion of theventure the method should be different i.e., the total income from the ventureshould be computed by taking the total sale consideration received anddeducing therefrom the total cost of the construction plus anticipated profitshown as work in progress in the accounts. Hence, section 145 (1) isapplicable and the income can be determined in a rational manner. The assessee’s explanation that they have filed advance tax estimatein anticipation that all the portions were sold by 31.3.1986 and that due to thesearch at their premises on 26.9.1986 there was a scare in the market , haveno basis or relevance. The fact remains that all but two portions werecompleted, sold and either registered or possession was handed over. Out ofthe remaining two flats one is an additional construction not found in theoriginal plan. Though the assessee claims that one of the purchasers hascancelled the agreement for purchase in its reply dt 6.1.1989 it claimed thattwo parties viz M/s. Ghiasuddin Babukhan Family Trust and M/s. BabukhanFamily Trust cancelled their agreements. But it admits that there is no written cancellation. IN fact, there two parties are assessee’s own family trusts,intended for the beneficiaries of the children of the two managing partners,and thus, the assessee’s plan has no basis and deserves no merit. Theassessee’s admission in its letter dated 6.1.1989 that none of the intendingpurchasers have filed any written claim for damages or for refund ofconsideration claim itself, shows that its earlier claims were all false andmisleading. The plea that in view of the apprehension of the firm that themunicipal authorities might demolish a part of the building, it was not possiblefor them to judge the final profit, is wrong and totally incorrect. The assesseewas following mercantile system of accounting, and offering anticipated profitevery year. The project is completed and the income has to be offered for theassessment. The assessee has offered the income from this venture i.e., ‘Al KarimTrade Centre’ in the Assessment year 1989-90. The income shown wasRs.17, 05,517/-. It may be interested to mention that even here the cost ofconstruction is shown as Rs.1,09,22,118/- which is the same amount, whichwas shown in the balance sheet from 31.3.1984 onwards till 4.1.1989. Theassessee has added provisions for lifts and municipal fees, which show that ithas not incurred any additional expenditure. The sale consideration shownalso is Rs.1,21,01,300/- which is only marginally different from the total saleconsideration . (Rs.1,21,39,000) adjusted earlier. Coming back to the question, for convenience sake, it requires to refer to section 22 of the Income Tax Act, which reads as follows; 22 Income from house property .- The annual value of property consisting of anybuildings or lands appurtenant thereto of which theassessee is the owner, other than such portions of suchproperty as he may occupy for the purposes of anybusiness or profession carried on by him the profits ofwhich are chargeable to income-tax, shall be chargeableto income-tax under the head "Income from houseproperty". On the reading of the above provision the question revolves as to theincidence of ownership and the income arising there from. Though, in thenormal parlance, the right, title and ownership are synonymous, however,simultaneously it does involve or simultaneously run with other interests,which however, do not have any botheration for considering the presentsituation. It is now well established that in respect of assets movable orimmovable there can be association of varied rights in complete or in quite,yet it does not take away the incidence of complete ownership or rights. On the reading of the above provision the question revolves as to theincidence of ownership and the income arising there from. Though, in thenormal parlance, the right, title and ownership are synonymous, however,simultaneously it does involve or simultaneously run with other interests,which however, do not have any botheration for considering the presentsituation. It is now well established that in respect of assets movable orimmovable there can be association of varied rights in complete or in quite,yet it does not take away the incidence of complete ownership or rights. In this connection, the parties relied upon the decision of the SupremeCourt in COMMISSIONER OF INCOME TAX, BOMBAY AND OTHERS Vs. PODAR CEMENT PVT LTD AND OTHERS[[1]], wherein considering almostsimilar situation in the backdrop of section 27 and 22 of the Act, held asunder; ( 26 ) IN our opinion, the above observations of this Courtclearly fixes the liability on a person who receives - or is entitled to receive the income from the property in his own right. In spiteof this, the assessing officers of various circles instead ofuniformally following the ratio laid down in this case have takendifferent diametically opposite views depending upon thepronouncements of the concerned High Courts in the circles onthe scope of Section 22 of the Act. The High Courts ofAllahabad, Punjab and Haryana, Rajasthan, Calcutta andPatna have taken the view by correctly understanding the ratiolaid down in Jodha Mal's Case (AIR 1972 SC 126) and theHigh Courts of Bombay, Delhi and Andhra Pradesh have takena different view wrongly distinguishing on facts in Jodha Mal'scase. ( 37 ) THE law laid down by this Court in Jodha Mals's case(AIR 1972 SC 126), according to us, has been rightlyunderstood by the High Courts of Punjab and Haryana, Patna,Rajasthan, etc. The requirement of registration of the sale deedin the context of the Section 22 is not warranted. ( 46 ) WE have seen that the High Courts are sharply divided onthis issue, one set of High Courts taking the view that thepromoters/ contractors after parting with possession on receiptof full consideration thereby enabling the 'purchasers' to enjoythe fruits of the property, even though no registered documentas required under Section 54 of the Transfer of Property Actwas executed, can be 'owners' for the purpose of Section 22 ofthe Act. The other set of the High Courts had taken a contraryview holding unless a registered sale document transferring theownership as required under the Transfer of Property Act theso-called purchasers cannot become owners for the purpose ofSection 22 of the Act. As a matter of fact, the judgment of theDelhi High Court in ITR No. 84/77 reported in Sushil Ansal v.CIT Delhi-III, 160 ITR 308 : (1986 Tax LR 1060), the appealagainst which is C. A. No. 4549/95 (supra) the learned Judgehas made the following observation : "before we conclude, we may mention that, during thecourse of the hearing, we suggested to the standingcounsel for the Department that the Central Board shouldconsider various practical aspects of this problem andformulate guidelines which would be equitable to thevarious classes of persons concerned. Perhaps, assuggested by this Court in CIT v. Hans Raj Gupta, (1981)137 ITR 195 : (1982 Tax LR 410), the time has even come for legislative amendment, if necessary, possiblywith retrospective effect. Serious consideration at thehighest administrative level was warranted in view of therecurrent nature of the problem, its magnitude and theconflict of judicial decisions. However, after takingsufficiently long adjournments, counsel informed us thatno decision could be taken by the Board and requestedthat we should decide the reference. We have, therefore,proceeded to do so. " ( 47 ) MAY be this is one of the reasons for the Parliament tobring in the amendment referred to above to Section 27 of theAct. At any rate the admitted position when the amendment wasbrought in, was that there was divergence of opinion betweenthe High Courts on the issue at hand. come for legislative amendment, if necessary, possiblywith retrospective effect. Serious consideration at thehighest administrative level was warranted in view of therecurrent nature of the problem, its magnitude and theconflict of judicial decisions. However, after takingsufficiently long adjournments, counsel informed us thatno decision could be taken by the Board and requestedthat we should decide the reference. We have, therefore,proceeded to do so. " ( 47 ) MAY be this is one of the reasons for the Parliament tobring in the amendment referred to above to Section 27 of theAct. At any rate the admitted position when the amendment wasbrought in, was that there was divergence of opinion betweenthe High Courts on the issue at hand. ( 55 ) FROM the circumstances narrated above and from theMemorandum explaining the Finance Bill, 1987 (supra), it iscrystal clear that the amendment was intended to supply anobvious omission or to clear up doubts as to the meaning of theword "owner" in Section 22 of the Act. We do not think that inthe light of the clear exposition of the position of adeclaratory/clarificatory Act it is necessary to multiply theauthorities on this point. We have, therefore, no hesitation tohold that the amendment introduced by the Finance Bill, 1988was declaratory/ clarificatory in nature so far as it relates toSection 27 (iii), (iiia) and (iiib ). Consequently, these provisionsare retrospective in operation. If so, the view taken by the HighCourts of Patna, Rajasthan and Calcutta, as noticed above,gets added support and consequently the contrary view takenby the Delhi, Bombay and Andhra Pradesh High Courts is notgood law. ( 56 ) WE are conscious of the settled position that under thecommon law owner means a person who has got valid titlelegally conveyed to him after complying with the requirementsof law such as Transfer of Property Act, Registration Act etc. Butin the context of Section 22 of the Income-tax Act having regardto the ground realities and further having regard to the object ofthe Income-tax Act, namely, 'to tax the income', we are of theview, owner is a person who is entitled to receive income fromthe property in his own right. Similarly, a Division Bench of this Court in R.C.No.63 of 1994 dated 22-2-2005 did not accept similar such plea on the self same question arisingas to the incidence of legal ownership under Section 22 of the Income TaxAct and rejected the contention advanced on behalf of the revenue. In view of the principle as enunciated by the Apex Court in the abovedecision, the question referred to is squarely covered contextually and inprinciple and we do not find any difference to distinguish or come to anydifferent conclusion. In the circumstances, we answer the question in favourof the assessee and against the revenue. __________________ B. PRAKASH RAO,J DATE: -05-2010TVK ________________ R KANTHA RAO,J THE HON’BLE SRI JUSTICE B PRAKASH RAO AND THE HON’BLE SRI JUSTICE R KANTHA RAO R.C. No. 65 of 1996 DATE: -05-2010 2. [1](1997) 5 SCC 482